Private credit has moved firmly into the spotlight. Once viewed as a niche complement to bank lending, it is now a central topic in policy, supervisory and market discussions across Europe and globally. As Non-Bank Financial Intermediation (NBFI) continues to expand, understanding how private credit fits into the broader financial ecosystem has become increasingly important for both market participants and policymakers and supervisors.
Against this backdrop, the Loan Market Association (LMA) convened a roundtable in Brussels on 13 January 2026, bringing together banks, private credit managers, institutional investors, the European Commission and European Central Bank. Held under the Chatham House Rule, the discussion provided a valuable opportunity for an open exchange of views on how private credit markets are developing, where risks may lie, and what this means for the wider financial system.
Private credit: Growth, evolution and policy attention
Participants noted that private credit is not a new phenomenon, but its scale, diversity and interconnectedness have increased significantly in recent years. A series of recent international and European reports has sharpened policy focus on NBFIs, particularly as links between banks and private credit providers deepen.
A recurring theme was the challenge of analysing risks in isolation. As private credit grows alongside traditional banking activities often supported by risk transfer mechanisms, partnerships and securitisations, it becomes harder to pinpoint where risks ultimately sit and how they might be transmitted during periods of stress. From a macroprudential perspective, participants agreed that a more granular understanding of market dynamics would be helpful, particularly as the market continues to mature.
Supporting the real economy
The roundtable highlighted the important role private credit plays in financing the real economy. Rather than replacing bank lending, private credit was widely viewed as a complementary source of finance, helping to meet the funding needs of European companies, including small and medium-sized enterprises.
From an investor perspective, private credit offers diversification and relatively stable long-term returns, which is particularly attractive for pension funds and insurers with long-dated liabilities. Throughout the session, participants discussed notable cases of institutional investors allocating substantial portions of their portfolios to private credit, underscoring its increasing significance in portfolio construction.
Private credit was also seen as well suited to financing infrastructure projects and public-private partnerships, where flexibility, tailored solutions and speed of execution are often critical. In many cases, private credit and banks work together through co-financing or risk-sharing arrangements, reinforcing the view that the relationship is more collaborative than competitive.
Credit cycles and valuation practices
As credit markets move into a more normalised post-tightening environment, participants broadly agreed that some level of restructurings and failures is a natural part of the credit cycle. Due diligence, underwriting standards and structuring were consistently highlighted as core responsibilities of private credit managers, particularly given the bespoke and illiquid nature of many assets.
Valuation practices attracted significant discussion. While private markets often exhibit lower reported volatility than public markets, this has drawn increased scrutiny especially where retail investors are involved. Evergreen fund structures were noted as an area of particular focus, combining the need for regular net asset value calculations with liquidity considerations and, in some cases, retail participation. Participants acknowledged both the benefits of these structures and the additional challenges they can raise around valuations and asset-liability matching.
Interconnections with the banking sector
One of the clearest messages from the roundtable was that banks remain deeply involved in private credit markets. Far from diminishing, the role of banks is evolving as private credit assets under management grow. Banks continue to participate through fund finance, securitisations, significant risk transfers and strategic partnerships.
New market entrants are also emerging alongside established players, often already subject to intensive supervisory scrutiny. Participants observed that discussions around creating a “level playing field” between banks and non-banks have, in many cases, shifted toward a greater emphasis on collaboration and partnership.
Transparency, data and stress testing
A persistent challenge is data availability. Information on exposures and risk allocation is often not public and can be difficult to aggregate, complicating system-wide assessments.
Transparency emerged as a central theme throughout the discussion. While private credit funds typically provide detailed disclosures to their investors, data is not always standardised or easily comparable across institutions or jurisdictions. Policymakers highlighted the difficulty of accessing comparable data that would support supervisory analysis, even where granular information exists at the investor level.
System-wide stress testing of NBFIs was recognised as particularly complex, given the diversity of business models, assets and funding structures. Participants noted that even more aggregated data by broad asset type or funding structure could represent a meaningful step forward for supervisors. At the same time, the discussion acknowledged the tension between calls for more data and broader efforts to reduce reporting burdens, reinforcing the importance of ongoing dialogue between policymakers and market participants.
Looking ahead
The roundtable underscored broad agreement that private credit plays a constructive role in Europe’s financial system and in supporting the real economy. At the same time, it highlighted shared challenges around transparency, data availability and systemic oversight as the market continues to grow and evolve.
By bringing together market participants and policymakers, the LMA’s Brussels discussion demonstrated the value of open engagement in building a common understanding of these issues. As work at EU and international level continues, such exchanges will remain essential to ensuring that evolving regulatory and supervisory frameworks are informed, proportionate and grounded in market reality.
LMA will continue to work with policymakers and regulators to bring greater transparency and insights to market participants. If you would like to receive updates on our regulatory work, please sign up for our monthly newsletter. For any questions regarding our work in this area, please do not hesitate to contact evelien.alblas@lma.eu.com or Jesse.Beardsworth@lma.eu.com
